Insulate people from the impact of future energy price rises
A further unprecedented increase in energy bills were announced today (3 February 2022) by Ofgem, the UK’s energy regulator. Households across the UK will face a record energy bill increase of 54% from April and millions of people will struggle to pay their bills and keep their homes warm, facing fuel poverty for the first time.
Ofgem lifted the cap on default tariffs to £1,971 along with the maximum rate that suppliers can charge for an average dual-fuel energy tariff by £693. This is the second major increase in energy bills in six months and the largest on record. The energy price rise, coupled with cuts to benefits and rising inflation, will likely result in millions more people across the UK being unable to keep their home warm. Those already in financial hardship will be hit the hardest.
National Energy Action (NEA), of which CSE is a member, estimates the cost of heating a UK average home will now double, compared to last year.
While there is much that UK government can do to for low-income households – and we acknowledge that the Chancellor has announced a support package today – there are actions Ofgem can take, in line with its statutory remit and its consumer vulnerability strategy, to prioritise the needs of the most vulnerable consumers.
Firstly, it could require energy suppliers to proactively contact customers who are self-disconnecting from their energy supply. Today’s price rises will result in more people switching their heating off.
People are frightened of getting into debt. Someone we support on our advice line contacted us this morning to say they wouldn’t be able to put the heating on anymore. This is going to be the case for millions of people across the country.
“We’ve calculated that this energy price increase each month is about the same as a low-income household would spend on groceries in a week. So to pay for the increase is essentially the same as asking them to go without food for a week every month.
“We need to literally insulate people from the impact of future energy price increases! If we insulate our homes and buildings well, they’ll become more energy-efficient – there’s a range of measures available for different budgets and we can support people with finding grants.Ian Preston of CSE
Energy suppliers know how much their customers are spending and have up-to-the-minute information for those on smart meters. This should alert them to vulnerable households where less energy than expected is being used. That household should be approached directly, and offered support, or, where appropriate, referred to agencies like CSE for specialist help.
Secondly, Ofgem should also publish all the commitments suppliers have made – for example, what they are doing about customers who self-disconnect. This would allow them to be held accountable for their promises.
The Covid-19 pandemic continues to cause widespread financial hardship. This means more households are now classified as being in fuel poverty, suffering from a cold home and making tough choices about how to spend limited budgets – sometimes choosing between heating or food.
Cold homes cause misery, ill-health and social exclusion. A warm home is a basic human right, and 2022 will be a tough year for many unless urgent action is taken.
CSE supports NEA’s call on the UK Government and energy regulator Ofgem to respond to the crisis and support vulnerable energy customers. See the NEA’s latest policy briefing here.
Through our advice line, home visits and one-to-one support, we support around 15,000 people a year to reduce their bills and make their homes more energy-efficient. Since the latest energy crisis began last summer, we’ve seen an increase in calls to our advice line and this new price hike is set to make the situation worse.